Iberia shares rise on BA-Qantas merger failure

MADRID (Reuters) - Shares in Iberia (IBLA.MC: Quote, Profile, Research) rose almost 5 percent on Thursday on improved merger hopes with British Airways (BAY.L: Quote, Profile, Research) after talks about a tie up between the UK airline and Australia's Qantas (QAN.AX: Quote, Profile, Research) were called off.

A British-Australian merger would have diminished BA's reliance on a deal with Iberia, weakening the Spanish carrier's hand in negotiations over the share split had BA decided to still continue negotiations with Iberia.

"In the face of the failure of negotiations between BA and Qantas, the market is betting that the process of integration between BA and Iberia will be taken up again, with a share split closer to 50-50 being one of the advantages for Iberia," Banesto analyst Jaime Semelas said.

The Spanish airline was the top gainer on Spain's Ibex-35 index .IBEX, and at 1015 GMT was up 4.3 percent at 1.93 euros, valuing the company at 1.83 billion euros.

At the same time, BA shares were down 1.8 percent to 168.9 pence, against a slight rise in the FTSE-100 .FTSE, valuing the company at 2 billion euros.

Iberia may also be boosted by a signal from pilots that they would scale back disruptions to Iberia flights in a conflict which broke out last Friday following years of talks.

A pilot source said disruptions to Iberia flights would ease on Thursday thanks to a resumption of talks on Wednesday between union SEPLA and management after a two-week break.

Pilots said the cancellation of 116 flights up to Wednesday and delays on 40-50 percent of flights was caused by the airline not employing enough pilots.

However, a source at Iberia said the pilots' main aim was to push for a say in the company's strategic decisions and to force through preferential disciplinary procedures. The two sides made no progress on Wednesday, he said. [nLH742493]